The college which I studied in, was a private institution run by an educational trust. Well, the the trust consisted of the founder’s family and a few close friends. The family ran the entire system as their personal fiefdom. Policies were thrown in at random. Problems were dealt in an ad-hoc manner and the roots causes were rarely dug out. And most importantly, debate on policies were frowned upon. Well, for someone like me, I found the place quite revolting. At some point during those four years, I swore that I will never ever work in a private institution.
But it now it seems that being public had its own set of problems. The organization is forced to listen to whims and fancies of the share holders – for whom, nothing matters but the dividends. The ultimate goal of the organization is now to meet quarterly expectations and give the biggest bang for the buck to it’s shareholders. Tim Malone, writes in his blog, “When management is wrong” (Tech of All Trades, a blog for managers in IT),
“What happened to me? I got fired. Not specifically for this incident at this time, but for several other failures to carry out directives from above. Oh sure, the official word was that my services were no longer needed as we had just completed a large MRP migration project. Nevertheless, I was fired and Harold continued on until his retirement this year.
“I was out of work for six months while I searched for another IT management position. I finally found one and have been happily employed for the last three years. I turned down several offers because I swore I would never work for another publicly held company again. For you middle managers of public companies, I salute you for your thankless job.”
Tim’s company had been through a merger. After doing an excellent job at systems integration, Tim was laid off. This blog was one in a three part series. I encourage you to read all three to get a better perspective of the story. In a recent thread on Google, the same sentiment is expressed.
What goes wrong in public companies? The pressure to meet financial expectations changes the focus of the company from building core competency to making money. In the name of growth, compromises on quality are made. And if it is an IT company, it ends with maintaining its legacy rather than innovate. Comments are the thread share above, indicate that code junkies are now mostly working on the Ad Sense base. Why shouldn’t that be surprising? Isn’t that which gets the most revenue to Google? Being a public company also ties the hands of the management to do something drastic (which would be in the best interests of the company in the long term). Say, for example, to freeze all new hires and set drastic goals to do more work the same population, thereby driving innovation and code quality.
It is not without reason that I call management “the dark side”. I call it the dark side since it involves people. Understanding people and making decisions which keep in mind the best interests of the goal and the myriad different emotions of people is tough. Now imagine dealing with thousands of shareholders!! Michael Johnson, a shareholder, writes some advice for the company that he has invested in. While I read through the article, I felt a bit sad. It was all about money and money. There was nothing about core competency. There was no code quality or re-use. Anyway, why should he be interested at all? He is just a shareholder. As long as the dividends pour in every quarter, why should he be bothered?
Private or Public? I am pretty confused now. What would you do if you start a company? How would you deal with the quality in scalability problem?
